Is There a Stepping-Stone Effect in Drug Use? Separating State-Dependence from Unobserved Heterogeneity within and between Illicit Drugs
55 Pages Posted: 25 Jun 2016
Date Written: 2015
Empirically, teenagers who use soft drugs are more likely to use hard drugs in the future. This pattern can be explained by a causal effect (i.e., state dependence between drugs or stepping-stone effects) or by unobserved characteristics that make people more likely to use both soft and hard drugs (i.e., correlated unobserved heterogeneity). I estimate a dynamic discrete choice model of alcohol, marijuana and hard drug use over multiple years, and separately identify the contributions of state dependence (within and between drugs) and unobserved heterogeneity. I find statistically significant “stepping-stone” effects from softer to harder drugs, and conclude that alcohol, marijuana and hard drugs are complements in utility.
Keywords: state dependence, stepping-stone, illicit drugs
JEL Classification: I10, C10, C33
Suggested Citation: Suggested Citation